Cross-border pensions transfer to be made easier

Companies will have to carry the main burden of transferring supplementary pension schemes that workers join to complement their social-security retirement benefits, according to a Directive approved by Parliament on 20 June.

In 2005, the Commission proposed a Directive aiming to facilitate workers’ mobility by setting minimum standards for the acquisition and preservation of supplementary pension rights, and thus make them easier to carry across borders. The Directive seeks to: 

  • Harmonise the conditions for acquiring supplementary pension rights;
  • tighten up the rules governing the transfer of acquired rights, and;
  • improve the information given to workers on how mobility may affect supplementary pension rights. 

On 21 March 2007, the Parliament’s Employment Committee adopted the report by Dutch Conservative MEP Ria Oomen-Ruijten on the Commission proposal (EURACTIV 21/03/07). By and large, they confirmed the Commission’s approach and even voted to extend its scope. The Parliament’s stance was confirmed in the plenary vote 21 June 2007. MEPS voted that:

  • Contributions paid into a pension scheme are reimbursed or transferred when a worker leaves before he has acquired pension rights, and; 
  • the minimum period required for the acquisition of pension rights (‘vesting period‘) must not be any longer than five years, and no such period must apply to workers older than 25.


Employment and Social Affairs Commissioner Vladimír Špidla  said that he was disappointed at the removal of provisions to assist the transfer of pensions. But he welcomed what he called "the report's clear commitment to setting minimum standards for the access to pension rights and fair treatment of dormant rights". "The Commission had made a much more ambitious proposal which would have enabled workers to enjoy true portability of their pensions," Špidla said, adding: "I still believe that the Parliament's report is a real step in the right direction."

Parliament Rapporteur, Ria Oomen-Ruijten, said after the vote: "Many people nowadays do not wish to rely on the basic state pension but contribute to supplementary or occupational pension schemes as well. Today, one out of ten workers has a supplementary pension. People do change jobs more frequently than in the past but nobody will apply for a job in another Member State as it endangers their pension. It is vitally important to make good arrangements for voluntary supplementary pension schemes if you want to stimulate the cross-border mobility of workers."

Green MEP Jean Lambert was equally unhappy about the outcome of the vote: "The European Parliament has gutted this proposed directive on transferring pension rights and adopted a text with little redeeming features. The purpose of the Commission's text was to remove barriers to the mobility of workers in the EU by providing for the portability of supplementary pensions rights but both the EP and the Council have torn the heart out of the proposal, which would no longer provide for the transfer of these rights when changing jobs." 

SME organisation UEAPME reacted negatively to the Parliament vote: "The Parliament’s plenary reconfirmed the deletion of unrealistic clauses on transferability, but rejected at the same time a number of sensible amendments that would have clarified the scope of the directive and shed some light on acquisition conditions. The final text does not mention whether the directive will apply retroactively to rights acquired before its transposition, which will create additional costs for small employers. Moreover, it introduces the troublesome notion of merging conditions for minimum age and for vesting periods." 

BusinessEurope said that the outcome of the Parliament vote "does not respond to the major shortcomings of the initial Commission proposal: increase of costs of operating supplementary pension schemes; interference with national responsibilities in this area; and the main problem of double taxation is not tackled". Secretary- General Philippe de Buck added: "The legislative proposal at this stage does not ensure the right balance between costs for pension providers and benefits in terms of mobility. It is time now for all EU decision-makers to make certain that this EU Directive does not harm the development of supplementary pensions in Europe." 

UEAPME Secretary-General Hans-Werner Müller said: "Today's vote is a missed opportunity to really encourage workers' mobility in the EU. The unworkable and unrealistic clauses it brings about will discourage small businesses from offering supplementary pension schemes to their employees, making it increasingly difficult for SMEs to attract the skilled workforce they need."  

The European Trade Union Confederation (ETUC) called the Parliament text "a step backwards from the Commission’s initial proposal" and accused the Parliament of taking a "minimalist position". In particular, it criticised the following points:

  • The five-year vesting periods, which means "that employees hired under successive fixed-term contracts will never be able to acquire supplementary pension rights because such contracts are frequently limited to two years"; 
  • the deletion of the provision on transfer of ’acquired rights’ for workers moving from one company to another, which "can hardly be interpreted as encouraging mobility";
  • the raise of the minimum age for the acquisition of pension rights from 21 years in the initial proposal to 25 years, which "penalises young people", and; 
  • the softening of the obligation to provide information to employees on their acquired rights, which "does not encourage transparency, which is vital in this field", and may in time "lead to unpleasant surprises for the beneficiaries who have not been informed in advance".


Supplementary pensions are retirement schemes, and sometimes also invalidity and survivors' benefits, which supplement or replace statutory social-security schemes. Demographic changes are making supplementary pensions an increasingly important way of securing a decent standard of living in old age. 

People change jobs more frequently than in the past, and with initiatives such as the 2006 European Year for Workers' Mobility, the EU encourages them to do so, because mobility benefits economic growth, competitiveness and job creation. 

However, when people move across borders, they often suffer a loss of pension rights. Some occupational pension schemes impose waiting periods, other schemes impose vesting periods, and not all schemes allow the transfer of rights to other schemes within the same country or between EU member states.

Within the EU, there are huge differences with respect to supplementary pension schemes. In some countries, they do not exist at all, in others the coverage is less than 1%. In Sweden, on the other hand, around 75% of all workers aged between 20-64 are members of occupational pension schemes.  


  • Parliamentarians said that they hope to find agreement with the Council on supplementary pension schemes "in the very near future". 
  • 1 July 2008: Target date for transposition of Directive into national legislation.

Further Reading